AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" (Excellent) of UnipolSai Assicurazioni S.p.A. (UnipolSai) (Italy). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect UnipolSai's balance sheet strength, which AM Best assesses as strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
UnipolSai's balance sheet strength is underpinned by its risk-adjusted capitalisation, which was at the strongest level at year-end 2021, as measured by Best's Capital Adequacy Ratio (BCAR). AM Best expects the company's risk-adjusted capitalisation to be maintained at least at the very strong level over the medium term. Factors also supporting the balance sheet strength assessment include the company's low reinsurance dependence, good internal capital generation and good financial flexibility. An offsetting factor is the concentration, albeit reduced by over 4% from year-end 2020, of UnipolSai's investment portfolio in Italian government bonds (38% of investments at year-end 2021), which exposes its risk-adjusted capitalisation to volatility. UnipolSai's solvency capital requirement ratio under Solvency II stood at 278% at the end of Q1/2022.
The risk-adjusted capitalization level for UnipolSai's holding company, Unipol Gruppo S.p.A. (Unipol Gruppo), stood at the very strong level at year-end 2021. The holding company is considered to have a neutral impact on the ratings, although it has a higher level of financial leverage than UnipolSai. AM Best expects UnipolSai's technical performance to remain strong, driven by strong technical performance on non-life business, and for the life business, a healthy margin between average segregated accounts yield and average minimum guarantee of 2.03% (at Q1/2022). A track record of good non-life underwriting performance is demonstrated by the company's five-year average combined ratio of 91.7% (2017-2022) (as calculated by AM Best). Non-life technical performance was strong in 2021, with a combined ratio of 93.3%, which is in line with the company's track record. Life revenues increased considerably in 2021 (24.4% year-on year) mainly as a result of the expansion of the BPER Banca agency network.
UnipolSai is the second largest non-life insurer in Italy, with a particularly strong position in the motor market there. Performance is supported by the company's access to data and sophisticated pricing capabilities, as well as its extensive use of telematics applied to the non-life segment. However, the concentration of its business portfolio in Italy exposes the company's operations to any adverse changes in the economic, political and regulatory environment in the country.
This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings, Best's Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings Assessments
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